Wesfarmers is expected to sell its remaining 4.9 per cent stake in Coles in a few months, raising another $1 billion and giving the group, which is almost debt-free, capacity to make several large acquisitions.

Wesfarmers' chief executive Rob Scott told The Australian Financial Review on Tuesday the group had been approached by several companies facing funding issues.

"There may be opportunities where our balance sheet can be put to work to support companies that are finding themselves with funding trouble and would also make good sense for our shareholders," Mr Scott said.

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"Our view at the moment is that there are still a lot of risks in the coming environment and you need to be very selective and discerning with investment," he said.

Macquarie's strategy team has identified 38 potential targets which might be attractive to Wesfarmers based on their proven business models, market size and attractive valuations.

The 38 companies were selected because their share prices had fallen more than 30 per cent from three-year highs, they had a history of profitability over the past decade, a current enterprise value of less than $5 billion and a structural return on equity above 12 per cent, but returns that were currently below their 10-year average.

The list also included Ainsworth Gaming Technologies and Crown Resorts, but given Wesfarmers' attempts to distance itself from gaming these appear unlikely. Macquarie said many of the companies on the list were unlikely to meet Wesfarmers' strategic objectives.

Macquarie also identified another 12 potential targets that did not meet the above criteria but which it believed were suitable strategic fits.

Strategic fits

Incitec Pivot and Orica have long been considered potential targets, but a takeover could raise competition concerns. Macquarie said Incitec Pivot and Orica were still the most likely targets due to the strategic fit for Wesfarmers' chemicals energy and fertilisers (WesCEF) business.

Boral, Domain and Fletcher Building would also fit well into Wesfarmers' industrials business as they had relatively stable cash flows and were trading off their highs, but cost synergies were less possible.

Macquarie suggested Wesfarmers could make another attempt to buy Lynas after a failed bid last year, saying another offer would likely be more enticing given the shares were trading 58 per cent off their three-year highs.

In the retail sector, Kathmandu and Super Retail Group, which owns Supercheap Auto, BCF, Rebel and Macpac, had sufficient scale to be relevant to Wesfarmers, had been sold off sharply and had supply chain synergies with Kmart and Target.

"But we believe this is less likely at this point, given Wesfarmers already has significant retail exposure," Macquarie said.

"Qantas' value has declined materially and is an attractive business, particularly the Frequent Flyer business. However, we see its earnings as too volatile for Wesfarmers and think this is unlikely," it said.

Macquarie said Wesfarmers could afford to borrow $10 billion, taking group gearing or net debt to EBITDA to just 1.7 times.

"However, we believe Wesfarmers is likely to be conservative given currenteconomic uncertainty and looming risk of shutdowns," the analysts said.

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